Thursday, 26 December 2013

When two arrogant heavyweights meet

In the blue corner - the gigantic gorllia, sometimes the most valuable company in the world. The inventor of the smartphone and the giant who believes that you can have any colour you want as long as it is black or white. Yes it makes a great product, but then behaves like a monopolist - sets prices , forces you and carriers, charges an absolute bomb and snubs India, launching its product whenever it likes, a few million years after launching in the US.  Meet Apple Inc.

In the red corner, the largest telecom carrier in the world. Has a mere 750 million subscribers. Cares two hoots about anybody anywhere, so much so that it has a proprietary system for 3G which nobody else in the world uses. Tells every body in the telecom ecosystem to grovel on bended knees before even coming to visit. Has the almighty Chinese government at its back; so it can basically do whatever it wants. Meet China Mobile.

In the middle is the Chinese consumer who is absolutely nuts. He and she own a zillion mobile phones. They are constantly at it; so much so that Homo Sapiens Chinesensis has evolved a neck at a 15% angle to the rest of the body so that the being can see the phone better. Loves the iPhone, loves every other company phone, has a million ripoffs as choice and spends  89.4% of waking hours fiddling with the phone - the rest 10.6% spent in the Karoake bar, popularly called KTV ! It also helps that the aforesaid species has tons of cash in the pocket.

Until now the two beasts circled each other warily, but never really wanted to get into the wrestling ring together. Apple was basically selling whatever it was producing and didn't care about China Mobile. China Mobile was busy recruiting the entire Chinese population and didn't care about any phone manufacturer. End result was that iPhones couldn't be used on the China Mobile network, atleast on 3G and no self respecting Chinese would be seen dead on 2G.

Things have however changed for both the giants. Apple has seen Samsung overtake it as the largest smartphone maker. Apple increasingly can't sit back after launching an iPhone model and simply count the cash . So much so that  it had to descend from its lofty heights and condescend to launch the iPhone 5S in India, a mere two months after launching it elsewhere (fly a kite Apple; I am not buying your product anymore). The hope for salvation  is the largest market in the world, China - where Apple has a miserable 6% market share.

China Mobile has two "tiny" competitors - China Telecom and China Unicom who adopt the global standard for 3G and have been offering iPhones for years. These pygmy upstarts have "only" 450m subscribers.  China Mobile's profits are falling and it is absolutely pissed off that Chinese kiddos, besotted with iPhones are ditching it despite getting Mao Zedong to order them not to from his grave !

Now the two giants have shed a bit of their arrogance and have  done a deal. Tim Cook actually flew to Beijing instead of the usual practice of asking every telecom company chief to stand outside his door and recite Gayatri Mantra 1008 times before coming in. China Mobile have actually welcomed him into their sanctum sanctorum, thus far reserved for only Xi Jinping and Li Keqiang. Terms of the deal have not been disclosed but it appears that China Mobile's 4G standards will be something that iPhones will be compatible with and hence China Mobile will now offer iPhones to its customers.

We'll have to wait for full details of the deal to judge which of the two heavyweights had to shed their arrogance more.  But is nice to see two beasts eating a little bit of humble pie. Especially since I can sit on the sidelines and hoot derisively having no truck with either. It's three and a half years since I escaped from the clutches of China Mobile. And yes, I know I said this in a  long ago post in Preeti's blog, but I am hoping that readers have short memories and will not hold this against me !


Sanjay Balachandran said...

Whoa!!!Ramesh... You were a big fan of Iphone... I do agree that IPhone is excessively hyped. It is a good phone but excessively priced. I do understand that Apple increased their share in India with their financing scheme and bartering old phone with their models

gils said...

another unabashed fan who realises the greatness of this blog and blogger :) I am sure there are many a silent reader who has this blog as part of their curriculum to learn about business musings :) as usual an amazing post

Ramesh said...

@Sanjay - Love iPhone, hate Apple's business practices. Apple has a miniscule share in India too - who will pay such prices.

@Gils - Ooooooooh. I am feeling very "iced" today :):)

Prats said...

Couldn't help laughing at the post coming from an Iphone lover. But we must agree that a lot has changed, specially with Steve Jobs not being at helm Apple has lost a few significant notches in it's power and influence.
On the other hand the popularity of Iphone in markets like India and China as a gadget of choice might have pushed China Mobile to grab the opportunity before people start dropping them out of favor.

Appu said...

Hmm iPhone lover? I thought, I saw you with an Android, when I saw you :)
Snubs India? Really? Isn't it the most rationalistic thing to do? I don't mean the snub as rational) Apple had a clear strategy and they were expanding one at a time. Even otherwise, Indian telecom market was not a right fit and they never would have succeeded here!(even if they had put their heart and soul)
Also, Apple started focusing on India, the day Cook said, India is not on radar. They have a habit of doing things the next day, when they publicly say they can't and won't do.

Long before, Tim, even wrote an apology in Chinese ;)

All things apart, well captured one.

Ramesh said...

@Prats - Oh yes - neither has any choice; they need each other. Just goes to show, however big a beast you are, in business there is always another your equal, if not your superior.

@Zeno - Firmly in the Android camp for a few years now although still in love with the iPhone as a device . I just will not buy an Apple product as long as their business model is the crap that it is in India. And ignoring India is a stupid thing to do - no business, whatever it might be in the world, can ignore a billion people as many have found out to their cost.

Sriram Khé said...

"When two elephants fight, it is the grass that gets trampled" ... says an often quoted Kenyan (?) proverb. As long as the grass in this case (the consumers) doesn't get trampled but actually gets to grow lush ...

Ramesh said...

@Sriram - Yes, a very apt saying. This one, hopefully, will be less trampling on consumers !

Follow by Email

Blog Archive

Featured from the archives